Cloud cost savings may be difficult to quantify

Thursday, October 11, 2012 - 8:01am

While there are many drivers behind implementing cloud services, some hold more weight than others. The potential to reduce IT expenses, for example, is convincing a significant number of decision-makers to embrace the technology as companies continue to struggle through today's ongoing economic crisis.

Cost-saving is one of the most attractive advantages of leveraging the cloud but can also be one of the most difficult to verify, as each organization is different, according to a report by the Federal Times.

"It's kind of a shaky premise to say we are moving to the cloud and going to save all this money and [organizations] don't have a sense of what they're spending today and how much they will save," said Ed Anderson, a research director at Gartner, according to the Federal Times. "I see a big danger in that because cost savings is the No. 1 justification for moving to cloud."

While the majority of executives believe it is possible to save costs by using cloud computing, the exact amount is uncertain and difficult to measure.

Will the cloud cut IT costs in the long run?
A separate report by IDG Enterprises also highlighted the cost-saving benefits of the cloud, revealing that nearly two-thirds of organizations believe there will be long-term reductions. As a result, more companies are investing in the public and private cloud.

The Federal Times said it is hard to quantify these amounts, however, as calculating labor expenses and productivity improvements are no easy tasks. In some cases, it costs money to invest in ways to measure these savings, complicating the matter even further.

Tim Andrews, vice president of technology at Booz Allen Hamilton, said decision-makers need to figure out how they are moving employees and applications throughout the enterprise if a company wants to determine how much it is truly saving, the Federal Times reported.

As the cloud industry continues to grow in the presence of a highly volatile economy, the promise of reducing costs will continue to be a major driver behind the adoption of new technologies. If businesses want to truly understand how much money they are saving, executives will need to investigate operations and establish what activities are being done differently.